2.1 Shortcomings of the social planner approach

A pandemic is ‘an outbreak of a disease that occurs over a wide geographic area (such as multiple countries or continents) and typically affects a significant proportion of the population’ (Merriam-Webster, 2021). From a strictly epidemiological perspective, a pandemic is a global health crisis. That is, pandemic challenges are primarily viewed as health problems of a global scale, which will require ‘combined efforts of all the countries in the world for the epidemic to ultimately subside’ (Tu et al., Reference Tu, Tu, Gao, Shao and Sheng2020). From an economic perspective, a pandemic is a global externality challenge: infected individuals engage in activities that impose negative externalities such as increased infection risks on those with whom they interact (Bethune and Korinek, Reference Bethune and Korinek2020). Moreover, non-infected individuals engaging in activities are at an increased risk of getting infected themselves and thus increase risks for others, thereby creating negative externalities. Because market mechanisms and avenues for exchanging property rights to internalize these externalities are absent, economists argue that this provides an adequate justification for government intervention into the social and economic lives of individuals.

Both perspectives –pandemic as a global health crisis and as a global externalities problem – are consistent with the SPA to pandemic response (Alvarez et al., Reference Alvarez, Argente and Lippi2020; Gersovitz, Reference Gersovitz2011; Gersovitz and Hammer, Reference Gersovitz and Hammer2004). SPA models consider pandemic response from the view of a benevolent planner with the knowledge, tools, and incentives to act expediently to limit the spread of the virus. The planner, it is assumed, will consider all costs and benefits, and maximize an aggregated social welfare function by implementing optimal control policy instruments such as quarantines, lockdowns, social distancing, and curfews whenever necessary. The rationale for this approach comes from the theory of market failure advanced by Pigou (Reference Pigou1920).Footnote ² Because market exchanges and decentralized mechanisms are unable to internalize the external costs incurred by a third party who is not engaged in these exchanges, governments are to intervene to correct market failure and increase social welfare (Medema, Reference Medema2009). Arrow (Reference Arrow1963) was the first to extend these ideas to healthcare. He argued that, when markets fail to provide optimal medical care, non-market institutions (i.e. governments) have to fulfill that gap.

Analyzing pandemic externalities from the lens of a social (health) planner has major shortcomings (Rayamajhee et al., Reference Rayamajhee, Shrestha and Paniagua2021). First, as public choice economists have pointed out, social planners are not (necessarily) benevolent; they could act in their own self-interest. Like all utility-maximizing consumers, central planners and public sector employees face costs and constraints and respond to private and political incentives (Buchanan, Reference Buchanan1979; Coyne et al., Reference Coyne, Duncan and Hall2021). Thus, planners and public sector employees allocating public health resources during a pandemic do so in a manner that could reflect their private interests, not public ones (Leeson and Thompson, Reference Leeson and Thompson2021). Moreover, public health planners work within a set of political institutions which can create incentive challenges. They include budgetary concerns, competition, and conflict among different levels of government, and political interests of public health officials, which may not align with the goal of optimizing public health provision (Coyne et al., Reference Coyne, Duncan and Hall2021). These challenges may, at times, incentivize officials to exaggerate certain aspects of public health concerns whilst downplaying other aspects, thereby resulting in a misalignment of public health policies from their required optimal levels.

The second shortcoming concerns the complexity of pandemic challenges and the limitations of central planning in dealing with complex challenges (Pennington, Reference Pennington2020). Etiological and epidemiological facts of a pathogen are difficult to establish with precision. For instance, while epidemiologists can discern general principles that tell us possible infection patterns, they cannot generate precise estimates (Ormerod, Reference Ormerod2020). How the pathogen spreads across the population will depend on a vast number of context-specific factors that scientists and planners cannot access and process. Both formal (legal, political, and economic) and informal (cultural, religious, and social) institutions shape beliefs, attitudes, incentives, and behavior (Bentkowska, Reference Bentkowska2021). The combinatorial possibility of these institutions is immense, and as a result, people's motivations, aspirations, attitudes, and behaviors are diverse. Therefore, it is not possible to predict with reasonable certainty whether or not a prescribed policy to limit the spread of a pathogen will lead to an intended social behavior in a large jurisdiction (ibid.). Thus, a social (health) planner faces structural challenges in gathering relevant facts and in designing optimal policy solutions.

Third, even if we ignore the aforementioned problems and assume that all the relevant facts are available to the planner and that she is able to determine the optimal policy, the planner operating in the real world faces high, even prohibitive, transaction costs. Rayamajhee et al. (Reference Rayamajhee, Shrestha and Paniagua2021) identify several transaction costs that can arise when implementing pandemic policies: exclusion/boundary costs, decision costs, monitoring costs, and sanctioning costs. Exclusion costs are costs of creating boundaries; decision costs are the costs of collective decision-making, monitoring and sanctioning costs are incurred in designing and implementing mechanisms to track violators and punish them. All these costs must be overcome to successfully implement any pandemic policies. This requires efforts from the bottom-up. Without such efforts, these costs can escalate to levels that make implementing a pandemic policy economically unviable (Bentkowska, Reference Bentkowska2021). Thus, analysts using the SPA to public health are likely to exaggerate the ability of a central planner to implement an optimal pandemic policy from the top-down and underestimate the possibility and consequences of policy blunders.

2.2 Pandemic governance as a nested externalities problem

The framework of nested externalities provides a better foundation to analyze large-scale externality problems, including global challenges such as pandemics and climate change (Ostrom, Reference Ostrom2009, Reference Ostrom2012). Externalities are said to be nested when ‘actions taken within one decision-making unit simultaneously generate costs or benefits for other units organized at different scales’ (Ostrom, Reference Ostrom2012: 356). Viewed this way, pandemic externalities are a set of nested collective action problems to be overcome by those directly involved, instead of an optimal control puzzle to be solved by experts and implemented by a central planner. Although an analyst may find it convenient to view global challenges as a singular and homogenous problem, many global challenges are, in reality, comprised of numerous heterogeneous externalities nested in multiple levels with significant overlaps between levels (Ostrom, Reference Ostrom2009).

Various pandemic challenges, including the limiting of the spread of infectious diseases such as COVID-19, fit well with the above description of a nested externalities problem. The decisions and actions taken to limit the spread of the virus at each jurisdictional level – counties, cities, states, regions, countries, and continents – generate costs and benefits that are transferred to other levels. How individuals, families, schools, and businesses within a jurisdiction respond to the pandemic generates externalities to the neighboring jurisdictions. Similarly, policies adopted by a political unit at a specific jurisdictional level, say a county, matters not only to that unit or level but across other levels. Unlike the standard treatment of pandemic externality as an optimizing problem – to be solved by a singular authority through uniform policies – the framework of nested externalities views the problem as that of solving multilevel collective action problems.

This alternative framing offers several key advantages. First, this approach acknowledges the highly dispersed nodes of interconnected or autonomous authorities that may be beyond the grip of a central planner. Infectious diseases do not obey a political boundary enforced by a jurisdictional authority. In some instances, the scale of externality may be too small for a high-level authority, thereby limiting its ability to create targeted policies to internalize the externality. In other cases, the scale of externality may be too large for the authority to effectively internalize it. Thus, the appropriate jurisdictional level at which to internalize the externality is not fixed. Depending on the organization of administrative and political units, the existing number of levels may be insufficient to match the scale of externality. That is, there are scale gaps. To overcome these gaps, effective coordination of different nodes of authority across administrative and political hierarchies is needed. The SPA ignores the need for coordination.

The second advantage that the nested externalities framework offers is that it accounts for the central role of social capital and informal institutions in solving collective action problems in the context of crises (Ostrom and Ahn, Reference Ostrom, Ahn, Svendsen and Svendsen2008). When pandemic challenges are viewed, not as optimal control puzzles to be solved by an external authority, but as collective action problems to be resolved by those with skin-in-the-game, the role of social capital becomes critical. The disaster literature documents three related channels through which social capital fosters collective action: (1) by establishing norms of compliance, (2) by facilitating transmission of information and knowledge, and (3) by increasing trust (Chamlee-Wright and Storr, Reference Chamlee-Wright and Storr2011; Rayamajhee and Bohara, Reference Rayamajhee and Bohara2020). The SPA fails to account for these mechanisms because it views these problems from the perspective of an outsider (the expert-planner), who is assumed to possess the social capital – ex nihilo – required to sustain trust and compliance.

The third advantage that the nested externalities framework offers is that it transcends the sterile market-state dichotomy (Ostrom, Reference Ostrom2010b). While many on-site pandemic externalities – that is, externalities occurring within a privately owned property or firm – can be addressed by private regulations within the specific site, market mechanisms and private regulations may not fully address cross-site externalities (i.e. externalities with spillover effects to neighboring sites and public spaces) (Leeson and Rouanet, Reference Leeson and Rouanet2021). For instance, infected visitors traveling from one bar to another transport the viruses with them (thus creating externalities along the way), which cannot be fully internalized by the other bar owners because of the virus's long incubation periods. The subsequent bar owners also lack the information (due to problems of information asymmetries) about the visitors' histories and social practices to accurately calculate risks.

On the other hand, for the reasons discussed before, large governments (states) also lack the knowledge and means to internalize externalities from the top down (Ostrom, Reference Ostrom2012). With regard to pandemic response, government policies meant to guide social behavior are only effective insofar as citizens trust their authorities (Bentkowska, Reference Bentkowska2021). Without public trust and mechanisms of self-monitoring in place, governments face prohibitive monitoring and sanctioning costs to implement such policies. Thus, pandemic response involves trust-related social challenges that neither markets nor governments can address fully. Although both markets and the state can play some trust-enhancing role, much of that role falls outside the domain occupied by markets or the state. That is, the static market-state dichotomy is characterized by scope gaps (Ostrom, Reference Ostrom2005). Informal and non-state associations, such as churches and clubs, can fill some of these gaps as they have a considerable authority in guiding social behavior (Chamlee-Wright and Storr, Reference Chamlee-Wright and Storr2009, Reference Chamlee-Wright and Storr2011; Rayamajhee et al., Reference Rayamajhee, Storr and Bohara2020). Moreover, solving collective action problems is less difficult when, for instance, church leaders and local media influencers work with government officials and private businesses. The SPA fails to account for the existence and relevance of civil society and informal institutions, and their co-productive interactions with markets and governments (Ostrom, Reference Ostrom1990).

In sum, analyzing pandemic externalities as problems of governing nested externalities at different scales allows us to avoid the oversimplification that a global solution must be the only way to cope with global challenges (Ostrom, Reference Ostrom2009, Reference Ostrom2010a, Reference Ostrom2012). The COVID-19 pandemic has made it clear that efforts at all levels (national, regional, and local levels) and across all sectors (private, public, and the ‘third-sector’) are needed to address large-scale externality problems. Top-down solutions negotiated at the global or national level, if not backed up by efforts at the lower levels, will not generate sustainable solutions (Ostrom, Reference Ostrom2012). Collective action problems vary widely across countries, communities, and cultures. Solutions, therefore, must reflect diverse institutional conditions on the ground (Ostrom, Reference Ostrom2005). Despite this reality, scholars continue to overinvest efforts into monocentric ways of articulating the problems we face, thus oversimplifying the nature of complex governance challenges (Thiel et al., Reference Thiel, Garrick and Blomquist2019). We also showed how the nested externalities framework recognizes that global challenges cannot have a single all-encompassing solution and require efforts from all sectors and across all levels.

3.1 Co-production and public health

The concept of co-production was advanced by scholars at the Workshop in Political Theory and Policy analysis at Indiana University (the Workshop) to explain the delivery of local public goods and services (Ostrom et al., Reference Ostrom, Parks, Whitaker and Percy1978; Parks et al., Reference Parks, Baker, Kiser, Oakerson, Ostrom, Ostrom, Percy, Vandivort, Whitaker and Wilson1981). Elinor Ostrom and her colleagues at the Workshop conducted extensive studies of local public goods delivery in 1970s and concluded that effective delivery was possible only when professional providers and service users proportionately contribute necessary inputs (Ostrom, Reference Ostrom1996). Thus, they developed co-production theory to explain the interdependence between the two classes of inputs, which they named regular producer inputs and consumer producer inputs. Co-production theory suggests that certain goods and services require inputs from both regular producers and consumer producers for their production and/or provision (Aligica and Tarko, Reference Aligica and Tarko2013; Brandsen and Pestoff, Reference Brandsen and Pestoff2006; Parks et al., Reference Parks, Baker, Kiser, Oakerson, Ostrom, Ostrom, Percy, Vandivort, Whitaker and Wilson1981). That is, for the good or service to have any positive value requires a ‘mixing of the productive efforts’ from both parties (Parks et al., Reference Parks, Baker, Kiser, Oakerson, Ostrom, Ostrom, Percy, Vandivort, Whitaker and Wilson1981: 1002). Police services, fire protection, education, and healthcare are common examples.

As some public administration scholars have recently noted, the entire public health policy of social distancing and other voluntary preventative measures can be viewed as a ‘gigantic co-production project’ (e.g. Steen and Brandsen, Reference Steen and Brandsen2020: 852). Rayamajhee et al. (Reference Rayamajhee, Shrestha and Paniagua2021), for instance, argue that no amount of social distancing can be provided by the government alone if inputs from citizens (‘the beneficiaries’) are missing. Without citizen input, governments face insurmountable epistemic challenges in gathering relevant information and prohibitive monitoring and sanctioning costs in designing and implementing any social distancing policies (Pennington, Reference Pennington2020; Rayamajhee et al., Reference Rayamajhee, Shrestha and Paniagua2021). Moreover, even a benevolent central planner, in the absence of necessary feedback from citizens, faces incentives and tradeoffs that make it prone to make policy errors (Coyne et al., Reference Coyne, Duncan and Hall2021). Thus, theories that do not take co-production seriously are likely to generate predictions that overvalue the competence and ability of central governments to gather and act upon vital information and undervalue the probability and consequences of major policy blunders.

3.2 Co-production and pandemics: empirical observations from the COVID-19 pandemic

Some scholars describe COVID-19 challenges as ‘wicked issues’ – defined by high uncertainty, complexity, and severity (Head and Alford, Reference Head and Alford2015; Steen and Brandsen, Reference Steen and Brandsen2020). Others describe them as complex phenomena, where ‘elements that make up a greater whole do not interact in a linear fashion and where the number of elements and the character of their interaction is too vast for them to be comprehended by scientific observers’ (Pennington, Reference Pennington2020: 204). Although expedient and authoritative actions by a central authority may be needed in limited arenas (e.g. Park and Chung, Reference Park and Chung2021), lasting solutions to ‘wicked issues’ or ‘complex phenomena’ such as pandemics must reconcile conflicting value systems and perspectives of multiple parties. Governments thus cannot address complex challenges alone, no matter how efficient their bureaucratic apparatuses are. Citizen inputs are essential in governing pandemic externalities.

Rayamajhee et al. (Reference Rayamajhee, Shrestha and Paniagua2021) analyze in depth the co-production of social distancing during the COVID-19 pandemic. They argue that draconian measures such as severe restrictions and lockdowns ignore the co-productive nature of social distancing. Thus, such measures are unlikely to generate long-term success, despite the possibility of short-term uptick in compliance rates. Instead, they emphasize the importance of non-coercive measures such as strengthening existing informal mechanisms for mutual monitoring and sanctioning to encourage long-term cooperation. Such mechanisms better reflect the diversity of value systems and perspectives and are thus better able to generate a shared understanding of risks and mitigation measures. Head and Alford (Reference Head and Alford2015) also argue that a shared understanding of the problem definition and solutions must be generated through discussion and contestation processes. Often, these processes themselves are more important than the details of final policy proposal, as they serve important validation and legitimization roles. An ‘optimal’ solution generated in an institutional vacuum that bypasses such processes cannot be considered to be validated, regardless of their scientific merit. So, they are unlikely to be accepted widely (Bentkowska, Reference Bentkowska2021; Ostrom, Reference Ostrom2000).

In practice, co-production of public health is ubiquitous during the COVID-19 pandemic, even though economists and social scientists have been slow to acknowledge it. For example, in the United States, both federal and state governments have actively sought public participation and cooperation from non-profit organizations and for-profit businesses in limiting the spread of the virus. Citizens, in turn, have responded by limiting in-person gatherings and finding innovative ways to retain some sense of ‘normalcy’ during the pandemic. In many instances, community members have adapted their networks to meet new collective needs. There is recent empirical evidence supporting these insights. Storr et al. (Reference Storr, Haeffele, Grube and Lofthouse2021), for instance, document the formation of socially isolated learning ‘pods’ in Seattle, Washington to provide kids with in-person instruction and socialization opportunities, whilst also providing a form of local governance amid the pandemic. Within these pods, close-knit families in a local neighborhood come together to share childcare responsibilities so that it reduces burden for individual families while maintaining social distancing and sanitary guidelines. Although the creation of ‘pods’ are private family-based efforts to minimize costs of services, they complement and benefit from government policies such as public health messaging and social distancing guidelines. Thus, the co-production of social distancing is made possible by private inputs (creation of ‘pods’) and government inputs (public health messaging and social distancing guidelines).

Shi et al. (Reference Shi, Jang, Keyes and Dicke2020) study the role of non-profit organizations serving the homeless population in Dallas, Texas during the COVID-19 pandemic. They find that non-profit organizations adopted innovative and creative methods to ensure continuity in service delivery in the face of severe disruptions and ambiguity caused by the pandemic. A Dallas area non-profit that provides shelter to individuals experiencing homelessness worked closely with the city of Dallas to overcome housing shortages caused by social distancing mandates. The non-profit reached out to the city government to advise a solution: to open a convention center which remained unused due to a ban on large social events for shelter purposes. The authorities accepted their recommendation. Although the city had the physical infrastructure (the building), they were unable to hire and train professional staff to take care of the population. The non-profit organization stepped in to fulfill that need and helped to provide the needed services. In this case, an effective response was co-produced by a direct mixing of inputs from a non-profit organization (professional staff and management) and government authorities (convention center operated by the city).

Cheng et al. (Reference Cheng, Yu, Shen and Huang2020) examine how public sector leaders coordinated with community-based organizations (CBOs) in Zhejiang, China to contain the COVID-19 pandemic. Although the dominant media narrative attributes Zhejiang's success to provincial government's expedient response, CBOs occupied the center stage in the province's COVID-19 response. Over 34,000 CBOs mobilized about 2.8 million volunteers to perform vital tasks such as tracing the source and spread of COVID-19, collecting donations and necessary supplies, assisting businesses to resume production of vital supplies, and preparing and providing meals to those in quarantine. Local governments complemented CBOs efforts by pooling strengths and providing resources to the most affected areas. They also assisted university researchers to obtain resources, technology, and access necessary to generate new knowledge that could inform pandemic response. The authors warn that solely crediting the central government for Zhejiang's success is both dangerous and misleading. They emphasize that the success should be attributed to the ways CBOs worked with local governments to co-produce effective COVID-19 response.

In contrast, Brazil provides an illustrative case where the federal government did not fulfill its co-productive role in COVID-19 response. Instead, Brazilian President Jair Bolsonaro dismissed COVID-19 as a ‘gripezinha’ (little flu), discouraged the population from getting vaccinated, and launched an attack on the scientific community for communicating about the pandemic (Hallal, Reference Hallal2021). As Ramirez de la Cruz et al. (Reference Ramirez de la Cruz, Grin, Sanabria-Pulido, Cravacuore and Orellana2020) note, although intermunicipal collaboration was widespread in Brazil, there was a lack of cooperation and support from high-level authorities. It comes as no surprise to many that 345,000Footnote ³ Brazilians have died of COVID-19, second only to the United States (Spring and Ricardo, Reference Spring and Ricardo2021). Brazil, alongside India, has been considered as one of the worst examples of governmental response to the pandemic, where central authorities have deliberately disregarded scientific advice, disseminated false information, and/or withheld data and vital information from scientists and researchers (Nature Editorial, 2021).

Despite national-level policy blunders, there were some successful co-production efforts at the local level in Brazil. Many small municipalities relied on previous partnerships to pull resources to respond to the pandemic. For example, Santa Catarina Inter-federative Consortium (CINCATARINA), a consortium of 109 associated municipalities, created a common platform called PANEL COVID-19 (the panel) to provide support to member municipalities. In response to the dismissive policies and messaging by the federal government, CINCATARINA mobilized the local assets of its member municipalities to disseminate accurate information about the risks and prevention measures based on the available scientific knowledge. The panel facilitated effective communication between public authorities, private businesses, and philanthropic entities to ensure that the products, services, and supplies needed for the prevention and treatment of COVID-19 are readily available. Although there are empirical hurdles to isolating and quantifying the impacts of CINCATARINA's role in limiting the spread of the virus, one noticeable result is an increased collaboration between private suppliers of local agencies to identify people's needs and ensure timely supply (Ramirez de la Cruz et al., Reference Ramirez de la Cruz, Grin, Sanabria-Pulido, Cravacuore and Orellana2020).

The documented success stories such as the ones reviewed above almost always entail effective co-production between governments, non-profit organizations, businesses, voluntary associations, and private citizens. The corollary is also worth emphasizing: governance failures can be attributed, at least in part, to the lack of complementarity between government policies and citizens' efforts and to the disregard for institutional diversity and informal institutions (Bentkowska, Reference Bentkowska2021; Rayamajhee et al., Reference Rayamajhee, Shrestha and Paniagua2021). Although co-production does not guarantee success, as evident in Brazil, its absence or disregard, certainly leads to failure. Where governance efforts by voluntary associations, local authorities, and the scientific community are met with hostility and dismissal by central authorities, devastation and tragedy are likely to follow (Ostrom, Reference Ostrom1990).

3.3 Conditions for successful co-production: Complementarity of inputs for co-governance

In evaluating the conditions necessary for successful citizen co-production to occur, it is important to consider the type of relationships between inputs from the two co-producers – citizens and governments. Co-production is feasible when either of the two types of relationships exist between regular producer inputs and consumer producer inputs: substitutable and complementary (Aligica and Tarko, Reference Aligica and Tarko2013; Parks et al., Reference Parks, Baker, Kiser, Oakerson, Ostrom, Ostrom, Percy, Vandivort, Whitaker and Wilson1981). The two classes of inputs are said to be substitutable if a one unit of regular producer input (with marginal productivity a) can be replaced by an a/b unit of consumer producer input (with marginal productivity b) without affecting the quantity of output produced. For example, residential garbage collection is a service (output) where the inputs from households and municipal garbage collection agency are substitutable. A resident may choose to not accept the service from the agency and instead take garbage to the drop site herself. This will require replacing all regular producer inputs with consumer producer inputs. However, the inputs are said to be complementary, or interdependent, when no output can be produced without both types of inputs. The production of education is an example where inputs from both teacher and student are essential (Parks et al., Reference Parks, Baker, Kiser, Oakerson, Ostrom, Ostrom, Percy, Vandivort, Whitaker and Wilson1981).

In the case of pandemic governance, many preventative measures including social distancing require both substitutive and complementary inputs from providers (governments) and beneficiaries (citizens) (Rayamajhee et al., Reference Rayamajhee, Shrestha and Paniagua2021). In theory, social distancing can be produced by citizens alone, whereas governments, no matter how efficient their bureaucratic apparatuses are, cannot produce it alone. In practice, however, social distancing may require a mixing of both government and citizen inputs (Steen and Brandsen, Reference Steen and Brandsen2020). That is because, for social distancing to have any tangible effect in limiting the spread of the virus requires solving collective action problems at different levels. This in turn requires an effective coordinating and information-dissemination role, which can be provided by governments. Thus, successful co-production of many preventative measures during a pandemic requires complementarity of co-producer inputs.

The role of social capital and public trust is also pivotal to ensuring complementarity between government and citizen inputs. For instance, as Rayamajhee et al. (Reference Rayamajhee, Shrestha and Paniagua2021) note in their analysis of social distancing, strong social capital allows for mechanisms of mutual monitoring and sanctioning to co-exist with government policies. Moreover, where public trust is high, citizens can form reliable expectations that government officials will reciprocate and complement citizen inputs. In an institutional environment characterized by high social capital and public trust, individuals, families, local communities, and businesses can foster new forms of social capital or dynamically reconfigure old forms of social capital to overcome new collective dilemmas (Storr et al., Reference Storr, Haeffele, Grube and Lofthouse2021). Local governments can thus provide complementary inputs by validating informal mechanisms and coordinating with higher level government authorities (Ostrom, Reference Ostrom2000).

However, where social capital is weak and self-commitment is lacking, costs of monitoring and sanctioning can rise to prohibitive levels (Ostrom, Reference Ostrom1990). This can provide justification for the role of government to impose measures to ensure compliance, given that the costs of non-compliance spill over to neighboring territories. Even when such measures are unavoidable, the type of inputs governments use to fulfill this role are critical. If government inputs comprise of stringent measures such as military intervention, mass surveillance, and harsh penalties, – i.e. inputs that are substitutes for informal mechanisms of mutual monitoring and sanctioning – they can crowd out or displace voluntary efforts in the long run (Ostrom, Reference Ostrom2000). Even in the short run, such measures can exacerbate pandemic denialism and vaccine skepticism. These challenges cannot be sustainably addressed by using draconian methods. Instead, focus should be directed toward increasing public trust and fighting misinformation through trusted channels.

If governments employ measures that are complementary to citizen engagement – such as compiling and disseminating accurate information and providing reliable public health guidelines based on the available knowledge – they are likely to increase long-term compliance rates and complement the efforts of informal institutions (Bentkowska, Reference Bentkowska2021). To conclude, the concept of co-production provides a more useful tool with which to study many aspects of pandemic governance, including most, if not all, preventative measures. The concept is particularly relevant for studying pandemic response in democratic regimes, where nodes of authorities are dispersed, and citizens possess certain inalienable rights and autonomy.

4.1 Toward a polycentric approach to pandemic governance

A polycentric approach to policy analysis offers an alternative analytical framework that accounts for both the nestedness of externalities and co-production processes – features that are characteristic of the real world, but typically ignored by scholars (Ostrom, Reference Ostrom2005). It is important to distinguish between a polycentric system and a polycentric approach to policy analysis. A system of governmental units is said to be polycentric if it comprises of numerous independent decision-making centers that may enter into formal and informal contractual relationships to achieve specific goals (Ostrom et al., Reference Ostrom, Tiebout and Warren1961). A variety of governance types can be considered as being polycentric (Thiel et al., Reference Thiel, Garrick and Blomquist2019). Even a strictly hierarchical system usually comprises of parts that have some polycentric features. Whereas, polycentric analysis refers to examining governance situations through the lens of polycentricity – that is, polycentric analysis means ‘seeing polycentrically’ (Blomquist and Schröder, Reference Blomquist, Schröder, Thiel, Garrick and Blomquist2019).

Unlike the hierarchical approach commonly adopted in pandemic policy analyses, the polycentric approach accounts for the nestedness of pandemic externalities within multiple governmental units. Each governmental unit at the micro- and meso-levels must take into account the challenges facing other governmental units (across micro-, meso-, and macro-levels) and the policies and actions they adopt. Thus, when analyzing policies from a polycentric perspective, relationships between governmental units – competitive, cooperative, or mixed – become pivotal. Accounting for these relationships is crucial because decisions made in real world, especially those pertaining to infectious disease externalities, do not occur in isolation. Moreover, private enterprises, government agencies, and non-profit organizations often operate across different governmental jurisdictions and share overlapping goals (Ostrom et al., Reference Ostrom, Tiebout and Warren1961). Through these overlapping roles, they develop experience, expertise, and partnerships that can be crucial in pandemic response. Contrary to the Pigouvian SPA, the polycentric framework offers enough flexibility to incorporate these overlapping roles and relationships.

Another advantage that the polycentric framework offers is the flexibility of the level of analysis (Ostrom, Reference Ostrom2005). Pandemic externalities vary widely in types and scales. Higher rates of infection, deaths, and hospitalizations in one location can affect neighboring locations. Reduction in business operations and government revenue in one jurisdiction also affects neighboring jurisdictions. Media reaction to pandemics in a specific area can affect other areas. But the scale of each of these externalities will likely be different. For instance, economic externalities can be more geographically limited than epidemiological externalities, at least in the short run. Moreover, the scale of the externality depends largely on where groups or cities are on the infection curve, which changes continuously (Küchenhoff et al., Reference Küchenhoff, Günther, Höhle and Bender2021).

Thus, the unit at which the externality can be optimally internalized is likely to vary depending on the specific externality being considered and its scale at a given time (Ostrom et al., Reference Ostrom, Tiebout and Warren1961). An analyst focusing on a fixed level to design policies will thus come up with rigid recommendations that either do too much or do too little. On the other hand, an analyst using the polycentric approach is not tied to a specific level of analysis. In fact, one of the central strengths of the polycentric approach is that it allows a researcher to zoom-in or zoom-out to different levels depending on the scale of externalities and the dynamics of existing formal and informal institutions (Ostrom, Reference Ostrom2005).Footnote ⁵ By regularly revising and adjusting the level of analysis, the analyst is likely to generate more nuanced policy recommendations that better match the scale of externality at hand and better fit the challenges facing communities on the ground.

4.2 Institutional fragilities and polycentricity

Scholars have noted that the lack of effective central authority can pose coordination challenges and management problems that add difficulties in implementing health policies, particularly in fragile states (Lieberman, Reference Lieberman2011). Additionally, when nation states lack legitimacy and contract enforcement mechanisms are weak, contracting parties (governmental and non-governmental actors and agencies) do not have a recourse to address a breach in an agreement. That can lead to contract breakdown situations where exchange relationships cannot function (Williamson, Reference Williamson2002). In such cases, an outside entity such as a donor agency may find polycentric approach to be more burdensome than direct top-down intervention (Lieberman, Reference Lieberman2011). Moreover, the presence of overlapping roles can incentivize government actors to free ride on the efforts of non-governmental actors or blame them for inefficiencies and failures. This is particularly problematic in developing counties with less accountable political systems, but it can also generate substantial costs in societies that have better state capacities.

A multitude of governance regimes qualify as polycentric (Blomquist and Schröder, Reference Blomquist, Schröder, Thiel, Garrick and Blomquist2019). Even totalitarian systems incorporate many polycentric features such as overlapping, semi-autonomous internal policing for the purpose of strengthening the central authority's political power (Thiel et al., Reference Thiel, Garrick and Blomquist2019). It comes as no surprise, therefore, that polycentricity characterizes the governance of infectious diseases in many countries, including those that handle infectious diseases poorly (Lieberman, Reference Lieberman2011). We leave aside the normative and economic rationale for advancing polycentric systems to other scholars (see Thiel et al., Reference Thiel, Garrick and Blomquist2019). However, given that governance regimes with multiple, semi-autonomous nodes of authority with overlapping roles are ubiquitous, we argue that pandemic policy analysis should take polycentricity seriously.

Ultimately, analyzing pandemic challenges polycentrically does not mean simply classifying a given system as more or less polycentric with the goal of recommending more or less polycentric governance to address a given challenge (Blomquist and Schröder, Reference Blomquist, Schröder, Thiel, Garrick and Blomquist2019). Polycentric order emerges; it cannot be planned or replicated based on an a priori design (ibid.: 45). Polycentricity thus presents an analyst with constraints she must work with: it is not a mechanical lever she can manipulate to achieve specific policy goals (Ostrom, Reference Ostrom1990). Thus, instead of deriving an abstract model of polycentricity from which to empirically analyze a case, the analyst must consider carefully different decision-making centers, their functions, capacities, and overlaps, their relationships (interdependent or independent, formal or informal) and histories, and various ways in which different centers coordinate (Blomquist and Schröder, Reference Blomquist, Schröder, Thiel, Garrick and Blomquist2019: 46–56). Policies that ignore these features are sure to encounter frictions, higher decision costs, scale-mismatches, and delays during implementation. This partly explains why external agencies including global-health organizations often experience unexpected difficulties in implementing policies to control the spread of infectious diseases.